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Issues: Whether special excise duty was to be computed after giving effect to all exemption notifications in force, including the notification providing set-off at the time of clearance.
Analysis: Section 5 of the Finance Bill, 1980 levied special duty on the amount chargeable under the Central Excises and Salt Act read with any notification in force in relation to the duty so chargeable. The three notifications in question were all exemption notifications issued under Rule 8(1) of the Central Excise Rules. The distinction drawn by the lower authorities between the earlier exemption notifications and the later set-off notification was not supported by the statutory language. The duty liability had to be determined on the effective duty after all applicable notifications were applied, and no separate basis existed for excluding the later notification from the computation.
Conclusion: The special excise duty had to be worked out after allowing the benefit of all the relevant notifications, including the set-off notification, and the demand as well as the penalty could not be sustained.
Ratio Decidendi: Special excise duty under the charging provision must be computed on the duty chargeable after giving effect to all notifications in force that reduce or exempt the basic excise duty, without drawing a distinction between exemption and set-off notifications where the statute does not do so.
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